New reports claim that struggling pharmacy chain Rite Aid is eyeing a second bankruptcy filing. According to the Bloomberg report, the retailer is considering a debtor-in-possession (DIP) loan to keep operations running during the proceedings. This would give it the time needed to negotiate the sale of parts of its business.
These reports allege that Rite Aid doesn’t have the liquidity it needs to stay afloat. That’s not too surprising as the chain has struggled against its larger rivals, such as CVS (CVS) and Walgreens (WBA). Even CVS and Walgreens, each of which operates more stores than Rite Aid, have had trouble navigating the post-pandemic economy.
Part of the problem these pharmacies face is larger retailers amping up their pharmacy offerings. That includes retail giant Walmart (WMT) and e-commerce behemoth Amazon (AMZN). Each of these offer a wider selection of goods found at traditional pharmacies with the added benefit of speedy delivery for online orders.
Not Rite Aid’s First Bankruptcy
This isn’t the first time that Rite Aid has filed for bankruptcy. The company did so in 2023 when it had trouble navigating the market after the COVID-19 pandemic. This also led to RAD stock being delisted from the New York Stock Exchange that same year. It emerged from that bankruptcy last year with hopes of turning around its business.
Since then, Rite Aid has acted as a private company. Doing so saved it from additional reporting requirements, but wasn’t enough to keep it out of danger. If the latest reports are true, Rite Aid’s chances of returning to the public market appear almost nonexistent.
CVS vs. WBA Stock
With Rite Aid out of the picture, retail investors may be eyeing other pharmacy chains. CVS appears to be the better investment than WBA with its consensus Strong Buy rating and 15.33% upside potential. Traders might also consider stakes in WMT and AMZN as they both have consensus Strong Buy ratings and significant upside opportunities. They also offer more diversified retail offerings, shielding them from struggles in the pharmacy sector.
